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Engineering: financial and otherwise

March 22, 2013

I’ve used Apple products for 30 years. They’ve always been expensive but worked well. The introduction of the revolutionairy iPhone (with AT&T subsidies that magically transformed a $600 micro-computer into a $199 consumer product for only $70 a month on a 24 month contract!) moved Apple products into the mainstream. Three years later, the $500 iPad revolutionized the idea of a computer and gave Apple their first-ever price story to sell.

While it’s never been hard to use Apple’s products, it’s been tough to be a stockholder over the past six months. After a meteoric rise following the introduction of the iPad, Apple’s stock dropped from over $700 to near $420 a share in the last six months. If you’ve owned the stock for years and your basis is $80 a share…no worries!  If you got in last summer at $650… not so much.

I had a flash of clairty when I ran across this delicious quote from Howard Lindzon:

Apple’s problem is that it can’t dance to what Wall Street wants.

Apple’s in the engineering business.  Any fool can imagine a wearable wristwatch computer. Hell, Dick Tracy had one 75 years ago. Apparently the challenge is in acutally designing, manufacturing and delivering millions of copies of a working device, all over the world, within a few days of the launch. Then upgrading the software month after month and year after year so that the thing keeps working (and even gets better) the longer you own it. A year later you introduce a new model that has real improvements yet doesn’t destroy the value of the original. Obiously, if you could do this, you’d have a great business and Wall Street would love you (and make tons of money off you).

Today Wall Street practically demands the next big thing, an iTV, an iWatch, an iAnything that would cause the iStock to iDouble.

One thing we should have learned in the past decade is this… financial engineering is easy; actual engineering is hard.

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